Buying your first car: Dealership vs Private (Part 2 of 2)

Choosing Between Dealership vs Private Car Purchases

In Part 1 of car loan tips, we looked at several things new car buyers should think about before buying a vehicle for the first time. In part 2 we take a look at buying a second-hand car and the pros and cons of buying either privately or from a dealership.

Overall, you might be able to buy a car for less if you buy privately, but that initial cost is not the only thing to think about. There are a number of benefits when buying through a dealership, and these can outweigh the initial savings of buying privately. The key is to take everything into consideration before making your decision.

Buying a car from a private seller

You may get a good deal buying through a private seller but other than making sure you are giving the car a thorough check, it's also important to get the vehicle assessed by a professional mechanical inspector. Private sellers are usually more eager to sell their vehicles as soon as possible and are typically more flexible on price during negotiation, however buying privately requires relying on your own judgement. 
Apart from the benefit on price, there are a few things you need to be wary of when buying a car privately. Here are some pre-purchase checks you should do:

  • Check that the seller is the registered owner of the car 
    To make sure that the seller is the actual owner of the car, ask to see the certificate of registration and check that the registered name and address matches the details on the seller’s driver’s licence. 
  • Make sure the car you are considering, is the one covered by the registration papers
    Make sure the number plate, vehicle identification number or VIN (a 17-character long alphanumerical combination that can be found under the bonnet, at the bottom of the windscreen, or along the doors) and engine number matches what it says on the certificate of registration. If the car does not have any registration on it, ask to see proof that the car has been through a safety inspection. Each state has its own laws pertaining to vehicle inspection, for more information check with your state’s motoring organisation, fair trading or consumer affairs department.
  • Check the registration is valid
    Confirm the car’s registration by verifying its license plate and VIN with your state’s government traffic authority or vehicle registry office.
  • Do a PPSR check. 
    Make sure that the car you are looking at doesn't have a third party registered security interest by doing a Personal Property Securities Register (PPSR) check. If the seller has done a PPSR check beforehand and is able to provide a certificate of the search, you can use the search number on it to retrieve the original search results.

If you are satisfied after your checks and are confident in purchasing the vehicle for the offered price, make sure you also obtain a written receipt to validate your purchase.

Buying a car from a dealership

Buying a car through licensed dealers may be more expensive than from a private seller but it can offer you greater protection.

Car dealers must only sell cars that have no money owning. All cars sold from a licensed dealer should include a car description form which has important information such as the dealer’s name, cash price of the car, VIN and engine number, mileage and warranty details where applicable.

You should check that the information on the form reflects the actual details of the dealer and car, just as you would with a private seller’s certificate of registration. It’s also a good idea to do an inspection on the car before you buy, especially if it doesn’t come with a warranty.

Here's what you can get when you purchase a car from a licensed dealer:

  • You'll receive a statutory warranty that guarantees the car is mechanically sound, and that most mechanical problems will be resolved within a certain period of time. Depending on the state you live in, the warranty and its conditions will vary, but largely depends how old the car is, its existing mileage and selling price.
  • Dealerships can provide specialist advice about the right kind of car to suit your needs and budget.
  • The dealership handles all the paperwork, including transfer of ownership to checking its registration, saving you a considerable amount of time.
  • The dealership may be able to assist you with financing and insurance options.
  • You could possibly trade in your old car with the new one.
  • You are entitled to a cooling off period should you change your mind. Note that there is no cooling off period for new vehicles. Cooling off period varies depending on the state you live in. Check with your licensed car dealership before signing on a contract. 

While opting for a cheaper vehicle may be tempting, if you don't know a whole lot about cars, it's probably a good idea to buy one from an authorised dealer.

To get you started, find out your individual rate and repayments before applying, without affecting your credit score here. Alternatively, call us on 1300 108 794.

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